Commercial rent ‘stabilization’ bill for real estate industry

The latest New York City Council proposal giving the real estate industry agita involves commercial rent “stabilization.” “It’s terrifying,” exclaimed one prominent owner, who asked for anonymity. “It is New York City adopting an anti-business agenda that would create a sense of political risk and discourage investment.” The new bill focuses on small retailers, office tenants and manufacturers. It is less complicated than a forced renewal scheme floated last fall but has its own quirks. The new proposal would create a nine-member (the bill memo says “seven”) rent guidelines board like the one that sets rent increases for apartments. This board would set initial rents and then calculate yearly increases for retail and office tenants under 10,000 square feet; and for manufacturing tenants under 25,000 square feet. Cushman colleague Steven Soutendijk says there is a misconception that building owners benefit by keeping spaces vacant, but they don’t: “Landlords have to pay their mortgage and property taxes, and brokers don’t make money if retail spaces stay vacant.” Podell says it took her almost 30 years to talk about the industry “with knowledge.” “I am still careful when I quote a rent,” she said. Among the numerous issues that experts consider when setting the rent for an individual store are its neighborhood, location — whether in-line or at a corner — the ceiling heights, columns and spacing, the co-tenancy, the layout, the place for deliveries, signage, flags, foot traffic, hours of operation, venting for restaurants, the ground floor space, the upper-level space, the lower-level space and subbasement space.